Truly affordable housing experiment in Vancouver
Frank Murphy — July 28, 2010
Vancouver journalist Frances Bula in Monday’s Globe and Mail described an innovative new affordable housing initiative in Vancouver’s Downtown Eastside. It’s a project by the people behind the Woodward’s redevelopment and includes some interesting elements like no parking and owners perform some of the building maintenance themselves. They claim a couple with two minimum wage paychecks could carry the mortgage. Habitat for Humanity and an arm of Vancity Credit Union and a neighbourhood housing group are involved.
One thing I found of particular interest: it’s estimated that it costs between $30,000 – $40,000 to build a single parking stall.
Posts and Comments on Nanaimo Governance 
Council’s recent approval of “Student” housing on Wakesiah Ave. opens up possibilities for Nanaimo of low cost housing that reduces building costs. I suspect that it will be difficult to approved housing for students which is off campus while at the same time restricting the units to students only. This is a development to watch.
Click to access RA000242.pdf
I’ve been a bit out of touch. Are these units rental, or are they strata? There are many schools which heavily market the BC secondary school graduation “Dogwood Certificates”, diplomas, and degrees to offshore students, as VIU does. (So does the local school district, when it comes to the Grade 12 grad Dogwood Certificate.) Then developers move in, selling strata units which the parents have been eager to buy, hedging their bets because of political instability in their own countries. Son or daughter lives there during the time they are attending college in BC and Mom and Dad are guaranteed a residence if there’s political upheaval at home and they have to flee.
There’s the issue of tuition, and perhaps someone could provide this information, too. If a student or a student’s parents own property in the province in which the student is attending college or university, is the tuition the much-higher “non-resident” tuition, or does it drop to “resident” tuition? Years ago, a BC friend, faced with “out-of-state” (“out-of-country”, in fact) tuition fees for veterinary college for his daughter seriously considered buying a piece of wilderness wasteland in a western state, which would have kept his daughter closer to BC for her veterinary training and would have given them a huge cut in her tuition fees, because she would no longer have been considered an “out-of-state” student. So–if these are strata titles, would VIU then have to reclassify the students who either own the units themselves, or have parents who do, as “onshore” students, charging them much-reduced tuition? I wonder if VIU has considered this? It’s certainly legal for non-Canadians, not regular residents of BC, to own property here.
Interesting?
It says in the article that, ”
nearly three-quarters of the condos will sell for less than $300,000, and more than half will be affordable to people making between $29,000 and $36,000 a year. That’s the income of an individual earning $15-$19 an hour, or a couple in which each partner makes the $8-an-hour minimum wage.”
Taking the arbitrary figure of say $250,000 cost with 10% down ($25,000) leaves a mortgage of $225,000. With a 5 year fixed mortgage of 5.79% the monthly mortgage would be $1411.00 a month or over 16,000 per year. 2 minimum wage earners would make, based on a 37hour week, roughly $30,800 dollars before taxes. Their mortgage would take approximately %50 of their gross income so while they may be able to afford it they would still be considered living in poverty and when you add in the extra costs of food, transportation, hydro, phone etc. The couple would have a pretty good chance of failing and losing their home.
The question is , is it truly affordable?
I took a lot longer and did less math to arrive at basically the same end question. Thank you for making the point much more concisely and much more exactly than I did.
I think I should explain that when I began my lengthy response, Gord Fuller’s hadn’t been posted. I’m feeling like an idiot. :-)
Ron, there is another proposal going forward to build student housing in the lot behind where the old grainery was downtown. Ian Naimuth (probably spelt wrong) presented the concept to the Nob Hill Group a few months back. The units were quite small and I believe parking was kept at a minimum.
It is only when BC Housing becomes involved that costs rise because of their new requirements to build to very high standards, Leeds Gold though it may be Leeds Silver.
Gord, is this the one you mean:
Click to access DP000637.pdf
Interesting, but raises several questions.
Calculating a minimum wage job at $8 an hour, eight hours a day, with a five-day work week, based on a fifty-week year simply for convenience, that totals $16,000 a year, therefore $32,000 a year if a couple works full-time, which may not be the case for many minimum wage workers. To be exact, there’s also the factor of the two extra weeks and the opportunity to earn tips in some minimum wage jobs. But will this be sufficient to satisfy mortgage lenders?
Is the Vancity participation simply in providing mortgage financing to the developer, covering the costs of purchase, some construction if necessary, renovations and upgrades, or will Vancity be willing to provide mortgage financing to minimum wage purchasers as well? If so, how large a down payment will Vancity require? Difficult, I’d think, to be able to put together much of a down payment if you’re a person who’s been working a minimum wage job, particularly since many minimum wage jobs are part-time, with people combining two or more jobs to provide anything approaching a liveable income. And for many minimum-wage people, some jobs may be unpredictable, and ebb and flow seasonally, eg., retail work for the Christmas/holiday season. The number of hours worked may vary for many people. Security of employment is certainly something mortgage lenders consider.
Will there, can there, be a caveat applied to the titles of these units, setting a minimum number of years of personal residence by the purchasers before they can flip them?
I suppose that a strata council will be required to “police” whether or not residents are carrying out the work around the building that they are expected to do. And to ensure that the original purchasers actually are residing in the units, and haven’t, a few months or a few years down the road, sublet to others. I’d have misgivings about issues like that. What kind of recourse is available if required work around the building isn’t done, or if units are sublet?
I’d share the concern of the Carnegie Community Action Program about increasing gentrification of the area. The downtown east side area *is* a community, albeit a community in which most of us would not want to live, and, of course, many who are forced to live there would rather not be there either, but those who live there *do* have a sense of community, and are seeing the areas available to them chipped away at. Municipalities like Chilliwack and Abbotsford have been seeing the inflow of street people from the downtown east side of Vancouver for some years now. Some have moved west and are on Howe Street, where they never would have been seen just a few years ago.
This may very well do something for minimum wage workers, which is laudable, but it does nothing for current downtown east side residents who may be living in the infamous “single occupancy rooms” or on the streets.
Wendy, you bring up the very point I was thinking about. While it’s mathematically convenient to assume a minimum wage earner is working 40 hours a week, the reality is that many employers consider someone to be full time when they are working 24 hours per week or more. So, even if someone is making $10/hr but only working an average of 24 hours per week, they’re only making $12,480 before taxes and deductions per year. This housing then, would not be affordable to them.
Having multiple jobs again is a mathematical convenience that people use when they make these calculations. The reality is that many employers do not want you to have multiple jobs because of scheduling conflicts and reduced availability of staff.
Another mathematical convenience being used here is assuming two wage-earners with no children. When two parents have 3 or 4 jobs between them, when is there time to look after children? Usually one income will end up going towards daycare requirements.
In reality when you factor in all the variables, this housing is not available to the poorest of the working poor. They would need incomes much higher than the current minimum wage in order to be able to afford it.
All really good points Survivor and Wendy. I’m interested in any move towards creating affordability by addressing building costs. Seems like a step in the right direction but doesn’t begin to solve the problem. It’s one element though.
The other aspect I think is important is that subsidy should be given to individuals in need not given to buildings. Making social housing ghettos doesn’t work. Income mix is an important part of a healthy neighbourhood and when someone’s income increases they should be quite happy to stay in their housing and their neighbourhood. And not want to escape the stigma of dedicated social housing. This system also breeds the growth of still more expensive social services industry empires of social workers and administrators.
So affordable housing with dignity is the goal but we’re a long way from it aren’t we.
How much of the current cost of housing has anything to do with the real costs to construct a building?
For example in Nanaimo in the past 15 years has the rapid increase in house prices been totally the result of material and labour costs? Or is greed and speculation the real culprit.
How much of it is the result of mortgage funds and borrowing standards being kept remarkably low, which means more and more people (think) they qualify, which has created an artificial upward force on housing prices?
Perhaps if housing were being built where the true cost of construction was reflected in the selling price truly ‘affordable’ housing could be built. By that I mean, remove inflated DCC’s and builder markups! Of course it would never happen.
However, the more you have government agencies running the show, the possibility of that happening is as good as the proverbial snowball’s.
Take a look at the drawings, this is student housing, two students per unit. It is mean stuff but something we were all willing to put up with for a few years as students because we didn’t have a life anyway and we knew that the future would be better. This is not a model of affordable housing and if someone is planning to sell these units as other writers suggest then someone is laughing all the way to the bank.
Nanaimo does have a good plan for affordable rental housing, they are called secondary suites and they can be found all over the City.
If we want to create affordable market housing a different model is required and not one that is multifamily warehousing. Try non-transferable 20 year leases of City owned land for a dollar; organize a non-profit to deliver small stand alone units that have front, back and side yards, places for gardens, windows in every room and a porch for bicycles. We used to call this design a “miner’s cabin”. You can see a very small one in Piper Park. If you build them today they would be called cottages, and at 600 sq. ft. you can get two bedrooms for I am betting under $25,000. On most lots you might be able to put four of these homes.
You will need to change the zoning by-law however because it is actually against the law to build a house smaller than 936.49 sq.ft. in the City of Nanaimo.
Just a short after thought about the real cost of housing as opposed the market cost of housing.
There is a development of new condos in the city’s north end which originally were listing for $369,000 which a short time ago is what they probably would have sold for.
Right now, the prices have come down to $299,000 and they are still not selling like hot cakes.
So, what is housing REALLY worth??
Jim, supply and demand are still the central determinants of price at the end of the day. Speculators and market manipulations aside… But there hasn’t been the emergence of the citizen co-ops and investment groups who might buy property and custom build for their members. That would cut out the developer and realtor profit, lower costs and build better housing. But in general we haven’t had great success in finding ways to work together in our own best interests. This suits the developers and realtors (and City Hall for that matter) just fine.